Correlation Between YieldMax N and Multifactor Equity

Can any of the company-specific risk be diversified away by investing in both YieldMax N and Multifactor Equity at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining YieldMax N and Multifactor Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YieldMax N Option and Multifactor Equity Fund, you can compare the effects of market volatilities on YieldMax N and Multifactor Equity and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in YieldMax N with a short position of Multifactor Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of YieldMax N and Multifactor Equity.

Diversification Opportunities for YieldMax N and Multifactor Equity

0.91

Correlation Coefficient

YieldMax N  Multifactor Equity

Almost no diversification

The 3 months correlation between YieldMax and Multifactor is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding YieldMax N Option and Multifactor Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multifactor Equity and YieldMax N is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on YieldMax N Option are associated (or correlated) with Multifactor Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multifactor Equity has no effect on the direction of YieldMax N i.e., YieldMax N and Multifactor Equity go up and down completely randomly.

Pair Corralation between YieldMax N and Multifactor Equity

Given the investment horizon of 90 days YieldMax N Option is expected to generate 4.17 times more return on investment than Multifactor Equity. However, YieldMax N is 4.17 times more volatile than Multifactor Equity Fund. It trades about 0.21 of its potential returns per unit of risk. Multifactor Equity Fund is currently generating about 0.3 per unit of risk. If you would invest  594.00  in YieldMax N Option on April 30, 2025 and sell it today you would earn a total of  279.00  from holding YieldMax N Option or generate 46.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

YieldMax N Option  vs.  Multifactor Equity Fund

YieldMax N Option

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in YieldMax N Option are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, YieldMax N showed solid returns over the last few months and may actually be approaching a breakup point.

Multifactor Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multifactor Equity Fund are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multifactor Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YieldMax N and Multifactor Equity

The main advantage of trading using opposite YieldMax N and Multifactor Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YieldMax N position performs unexpectedly, Multifactor Equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Multifactor Equity will offset losses from the drop in Multifactor Equity's long position.

The idea behind YieldMax N Option and Multifactor Equity Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.